EU budget cut most fortuitous for Cameron

"The British public can be proud that we have cut the seven-year credit-card limit for the EU for the first time ever," he said before travelling home for dinner with his wife, Sam.
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Fuelled by copious cups of coffee from a brand-new Nespresso machine, David Cameron chalked up a Brussels first as he debuted at an all-night EU summit.

Looking mildly tired after 25 and a half hours on the go - with a two-hour "freshening up" break at 10am on Friday - the prime minister hailed his achievement in negotiating the first ever cut in an EU budget.

Cameron will receive a warm, and possibly rapturous, reception from Tory MPs on Monday when he reports back on his success in securing his aim of a cut or a real-terms freeze in the EU's near-€1 trillion budget. While his red, and puffy cheeks showed signs of a gruelling Brussels experience, it is difficult to imagine a better outcome or more fortuitous timing for the prime minister.

Weeks after he was warned that he was marginalising Britain in the EU by outlining plans for a referendum by the end of 2017, Cameron has shown that Britain can shape events. He believes the summit shows the wisdom of his three fundamental calculations about the EU: that Britain should never underestimate its ability to be a major player in the EU. It should also not be frightened of laying down red lines not to be crossed, though it helps not to refer to them in that way.

MERKEL ONSIDE

Cameron's final, and most important, calculation holds that the key player in EU negotiations is the German chancellor, Angela Merkel.

If she is pushed too far, Merkel will bite, as she did in December 2011 when she drew up the eurozone fiscal compact treaty outside the EU after Cameron wielded a veto. But if she believes that Cameron's demands are reasonable, then she will work constructively with him as she did over the EU budget.

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Cameron might, however, like to bear in mind the thinking of Merkel's officials in the run-up to the first budget summit in November. Berlin was quite prepared to see Cameron isolated to show Merkel's displeasure as she awaited his speech on the EU, which she feared would be unremittingly hostile. In the end, Merkel worked closely with Cameron in November for one very simple reason: she agreed with his call for restraint.

The German chancellor is keen to co-operate with Cameron at a tactical level - if she agrees with him - and at a broader strategic level to maintain the UK as an influential member of the EU as a counterweight to the protectionist French. But Merkel's support should never be taken for granted.

The prime minister will therefore need to calibrate his negotiating stances with care when he embarks on the much more delicate and complex task of repatriating EU powers, as he promised in his Bloomberg speech on the EU.